Therefore, rather than genuine engagement with the issues posed to economic activity and its material organisation by phenomena associated with the use, production, reproduction and distribution of knowledge, concerns for the latter (together with technology, research and development, learning-by-doing, etc.) within EGT are indicative, and part and parcel, of a second phase of economics imperialism (Fine, 2000, p.247). Indeed, in a nutshell, EGT models make appeal to some form or other of market imperfection to allow, directly or indirectly, for the explanation and endogenization of increasing returns to scale; these, in turn, determine differences in productivity and growth rates across countries (Fine, 2006a, p.79). Thus, the theories of technical change and of market imperfections provide EGT models with intellectual content, with respect to which EGT is ‘essentially cannibalistic’. For the former, token insights on productivity increase drawn from the theories of Schumpeter, Kaldor, Smith or Arrow, for example, together with insights from otherwise heterodox economics or other social sciences, are incorporated within models. But, in the process, they are simplified for the purposes of modelling, ‘reconstructed on an individualistic basis’, detached from their intellectual origins and roots in socio-historical frameworks of analysis and, ultimately, debased (Fine, 2000, p.250).73 Thus, for example, Nelson (1997, 1998) highlights how there is little novelty in the theoretical ideas and insights of EGT models with respect to the relations between economic growth and technological advance, apart from these being formalised and, therefore, made ‘more legitimate’, ‘even sexy’ (Nelson, 1998, p.506), for the economics profession. However, he also points out how this acts as a straitjacket for the theory which, through mathematical formalism and allegiance to equilibrium, misrepresents the evolutionary nature of technological processes and advances and reduces the Knightian uncertainty characterising them to calculable risk. With respect to the incorporation of market imperfections within EGT models, ‘[t]he discipline can plunder itself for’ all kinds of ‘sources of Pareto inefficient outcomes and translate these into sources for growth as opposed to deadweight losses’, with special favour accorded to sources concerning ‘imperfect competition, since innovation involves temporary monopoly rents’ (Fine, 2000, p.250) (as discussed above with respect to patents). Therefore, both these tendencies and EGT are exemplary of a second phase in the development of economics imperialism. Indeed, while in the first phase of economics imperialism (usually associated with the work of Gary Becker) economists analysed any aspect of social life and the non-market as if it were a market and, therefore, through the lenses of economic rationality, in the second, new, phase of economics imperialism economists take the social (entities, institutions and outcomes) as resulting from the actions of rational individuals operating in the presence of market imperfections, especially informational ones (Fine, Milonakis, 2009). In other words, while economics continues to be based upon individual Questioned about whether the work of Joseph Schumpeter had influenced his ideas, Romer responded: ‘No, I can honestly say that it has not. Schumpeter coined some wonderful phrases like “creative destruction” but I did not read any of Schumpeter’s work when I was creating my model. As I said, I really worked that model out from a clean sheet of paper. To be honest, the times when I have gone to try to read Schumpeter I have found it tough going. It is really hard to tell what guys like Schumpeter are talking about [laughter]’ (Romer, 2005, p.686). Similar opinions are expressed, in the same interview, about Allyn Young, Gunnar Myrdal and Nicholas Kaldor (as proponents of cumulative causation within economics), whose work is charged by Romer of being ‘purely verbal’ (as opposed to ‘purely mathematical’) and, therefore, prone to ambiguity in interpretation.

optimisation, now social institutions and structures are rendered endogenous.74 While this has allowed economics to bring back in within its purview the social and the historical, although on debased terms (Fine, Milonakis, 2009), it also speaks volumes about the cumulative nature of knowledge within economics itself. Indeed, in a very superficial sense, the latter can be said to be strongly cumulative, for mainstream economics builds on, and reproduces, its technical apparatus based on abstract mathematical formalism and its hypothetico-deductive method, especially as the discipline has expanded beyond its own limits to incorporate the noneconomic within its purview. Yet, at a deeper level, disciplinary knowledge can be said to be strongly non-cumulative, since the orthodoxy’s commitment to its own technical apparatus and method comes at the expense of content and realism, as well as through active neglect of any alternative or critique that may come from other disciplines or from within economics itself (even when these confront it with its own inadequacies as judged from its own standards, as in the Cambridge capital controversies) (Fine, Milonakis, 2009).

1.5) Conclusion This chapter has offered an overview of the reasons why mainstream economics is unfit for the purpose of understanding the problems posed by the use, production, reproduction and accumulation of knowledge as judged from the standpoint of any contribution taking a different view of the economy, knowledge, and the relation between them. The discussion has been organised around five axes, each, respectively, highlighting: the reasons for the discrepancy between the rhetoric and the policy in practice of the KBE; the problems raised by the notion of historicity with respect to both the KBE and the EK; the inability to sustain the EK as a new sub-discipline within economics (as defined by the main proponent of the expression); the aporetic character of knowledge for mainstream economics; and the inconsistencies of EGT with respect to issues relating to knowledge and technology (not least as a key illustration of the pertinence of the previous axe). At this point, two observations are in order. Firstly, the rhetorical, if not outright ideological, function of the KBE concept and In this regard, another example (germane to the concerns of this chapter) of this shift within economics can be found in the passage from the justification of publicly-funded science based on the (“old”) economics of science promulgated by Arrow, 1962a and Nelson, 1959, to Dasgupta and David’s (1994) “new economics of science”. Indeed, the former was concerned with warning policy makers of the systematic failure of markets to provide adequate investment in basic research, ensuing from the public good character of knowledge and the resulting divergence of private and social returns to scientific activity. Dasgupta and David, on the other hand, are concerned with explaining ‘the underlying logic of the salient institutions of science’ (with emphasis on the coexistence of “open” and commercial science), and examining the ‘implications of those differentiating institutional features for the efficiency of economic resource allocation within this particular sphere of human action’. ‘To carry out this program’, Dasgupta and David propose a framework which builds ‘upon the foundations laid down by the classic contributions in the sociology of science, adding to the insights provided by the “old” economics of science some new ones... drawn principally from the... analytical literature that treats problems of behavior under incomplete and asymmetric information’ (Dasgupta, David, 1994, p.492).

putative need for the development of an EK must be emphasised. In many ways, the latter represent an upbeat take on, if not the stubborn resolution to ignore the causes and consequences of, what have been disquieting phenomena and developments in the polity and material organisation of economic activity in and across Western economies. Indeed, ‘the loss of manufacturing base in most of the post-World War II self-identified industrial economies’ (Mirowski, 2011, pp.7-8) cannot be simply characterised as ‘some smooth shift from one indifferent economic “sector” to another, as in the adjustments to “comparative advantage” imagined by economists’, since an ‘elaborate industrial base had previously defined many aspects of what it meant to live in a developed economy, in everything from the culture of consumption to the promotion of certain versions of science, so’ that ‘the erosion of the manufacturing base within these economies could not help but have far-reaching ripple effects, even for those who might have been proud never to have set foot on a shop floor’ (p.8). Thus, praises of the “weightlessness” of Western economies, together with the concomitant “rise” of the service sector, have performed the discursive function of covering a reality characterised by processes of outsourcing and off-shoring, the “rewiring” of the labour process, commercial activity and competition through powerful injections of ICTs (Mirowski, 2011; Huws, 2003), and, most importantly, the hypertrophic growth of the financial sector (the primary sector of the economy in which “knowledge” and ICTs have been actually put to work to their maximum potential).75 Secondly, while the five axes mentioned above have provided useful organising principles, a common theme has run beneath them, periodically resurfacing: the inadequacies and contradictions of the mainstream in dealing with the production, reproduction and As Mirowski (2011, p.10) points out, such an ideological function of the KBE found manifestation and material support in the US in the construal of statistical categories, for it is possible to ‘pinpoint the emergence of the information society as a self-conscious statistical category with the revision of the Standard Industrial Classification (SIC) as the 1997 North American Industrial Classification System’ (following Malone, Elichirigoity, 2003). ‘This modification took various industrial activities that had been scattered by function throughout the previous SIC code and grouped them together for the first time as dealing with a product called “information”, which itself could be rendered amenable to ownership and control’. Similarly, on the role of changes within the classification of economic activities as support for the rhetoric of the KBE, see Huws, 2003. Further, with regard to the absence of any attention to the hypertrophy of finance within the rhetoric and scholarship of the KBE, Thompson and Harley (2012) (following Lazonick, O’Sullivan, 2000) demonstrate that, while the KBE rhetoric has been much more prominent than the (competing) shareholder value discourse/rhetoric, it is the latter that has had greater and more significant material outcomes. Lastly, with respect to the relationship between finance, knowledge and ICTs, it is worthwhile to notice how ‘advances in computing power have shifted decisively the frontier of electronic, and in particular algorithmic, trading over the past few years’ (not least through the rise of “high-frequency trading”) (Haldane, 2011, p.4), and (irrespective of content) how it is not casual that an attempt to understand the socio-economics of finance (through deployment of ethnographic studies) has spawned from the sociology of scientific knowledge of Callon, Latour and the like (see, for example, MacKenzie et al., 2007). For examples of applications of the latter theoretical development to the former development in the material organisation of financial markets and practices, see: Zaloom, 2006; Lenglet, 2011.

accumulation of knowledge are such and so many, that declarations of the centrality of knowledge within contemporary capitalism from within mainstream economics could be read as tantamount to as many proclamations of its own irrelevance. Yet, however devastating the criticisms that can be voiced against mainstream economics, both in general and with respect to its treatment of knowledge and its relation to the economy, its stronghold upon the discipline remains as strong as ever, regardless of whether and how the latest research fads and fashions (of which the KBE and the EK are but one example) may contradict its own apparatus and method or put strain on its logical consistency. However, this apparent paradox can be easily dispelled by reference to the history of the discipline. Indeed, as is well-known, the marginalist revolution of the 1870s set the base for the technical apparatus (organised around utility and production functions) and technical architecture (organised around equilibrium and efficiency) of mainstream economics, while the formalist revolution of the 1950s elevated to pride of place the mathematisation of the discipline (under American aegis), thus sanctifying the predominance of form over content. Further, the passage from the marginalist to the formalist revolution has been marked by the will to extract as much as possible from, and bring to their furthest implications, the deductivist method and mathematical apparatus of neoclassical economics. Consequently, this has entailed the removal and repression of anything (in terms of method, conceptual tools, and technical assumptions) that could potentially unsettle such a project, and the consequent implosion of economics (in terms of content and scope) onto the narrow, unrealistic assumptions at the basis of microeconomics. But, once the technical apparatus, technical architecture and analytical principles of mainstream economics have been secured, this has constituted the basis upon which to bring back in, and draw upon, whatever the mainstream likes, regardless of conceptual or logical consistency and with the technical apparatus and architecture remaining firmly at the core of the discipline (Fine, Milonakis, 2009; Fine, 2013). This has resulted in a veritable explosion of economics, exemplified by economics imperialism in both its first and second phases and the firm belief of economists that ‘they can superannuate and subsume all other social sciences within their own “paradigm”’ (Mirowski, 2011, p.333).

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